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spk01: Third quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Jonan Ding, IR manager of the company. Please go ahead, Jonan.
spk06: Thank you very much. Hello, everyone, and welcome to 36KR Holdings' third quarter 2023 earnings conference call. The company's financial and operational results were released earlier today and have been made available online. You can also view the earnings press release by visiting the IR section of our website at ir.36kr.com. Participants on today's call will include our co-chairman and CEO, Mr. Da Gong. and our chief financial officer, Ms. Lin Wei. Ms. Lin will start the call by providing an overview of the company and performance highlights of the call in Chinese, followed by an English interpretation. Ms. Lin will then provide details on the company's financial results before opening the call for your questions. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. private securities litigation reform. Act of 1995. Forward-looking statements involve risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's prospectus and other public filings as filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements. except as required on the applicable law. Please note that 36KR's earnings press release and this conference call include discussions of unaudited gap financial measures as well as unaudited non-gap financial measures. 36KR's earnings press release contains a reconciliation of the unaudited non-gap measures to the unaudited gap measures. And please note that this all amount members are in R&D. I will now turn the call over to our co-chairman, CEO, Mr. Sa Gangfeng, to help this program. Thank you. Hello, everyone. Thank you for joining our third quarter 2023 earnings conference call.
spk02: This quarter, the company's main business has achieved a steady development, with a total income of 2.5% increase. We continue to enrich the content ecosystem, not only with the diversification of products and services, During the third quarter of 2023, we achieved solid progress across all of our business segments, propelling a year-over-year increase of 2.5% in total revenue as we consistently enrich our content ecosystem and so to diversify and expand our product and service offerings.
spk06: We also depend on the integration of AI applications across our business in the evolution of generative AI and large language models. These synchronized endeavors have empowered great strides in our commercialization and further elevate our operating efficacy, effectively reducing overall costs to improve efficiency company-wide. I'd like to begin with a discussion of this quarter's content initiatives and advancements. followed by a more detailed look at our commercialization progress across each of our business segments.
spk02: The original content is the core competitiveness of our company. For many years, we have continued to build and accumulate many high-quality, sustainable media, and built a web of content that covers multiple sustainable channels and user-centered content, assisting new business participants in investigating the trend of the industry and the market trend. This quarter, we have continued to maintain high-quality output, including endless articles. More than 1,000,000 articles have been read, and more than 110 films have been published. At the same time, 36K's core competitive edge lies in our exceptional content creation policy. Through years of dedicated effort, we have cultivated an extensive portfolio of premium sub-vertical media.
spk06: Our multi-dimensional content matrix covers a broad array of trending topics and fields to connect with diverse user demographics, offering deep insights into industry trends and market dynamics for new economic participants. During the third quarter, we maintained a continuous flow of high-quality content with blockbuster articles emerging back-to-back. More than 110 articles achieved over 100,000 page views, We also continue to expand our footprint across various channels, crafting a multi-platform cross-media circulation matrix. As of the end of the quarter, the number of our followers surpassed 32 million, rising 20% year-over-year. This achievement reflects 36K's substantial market influence and sets the stage for greater business development.
spk02: In addition to the headline content, Our development in the form of short videos, long videos, and other content has also brought about new breakthroughs. In terms of short videos, we continue to enhance the value of the platform, and create high-quality content that is more standard and attractive for the development of the industry. In this quarter, we successfully launched the new column of players. The first part of the content talks about the ups and downs of LeGao, a company that has been in business for hundreds of years, and it has received a lot of users' reposts and likes. In addition, our social media, 30 cars, and cars continue to grow. The amount of content and the number of goods in the content are all showing a trend of growth. In addition to the solid performance of our text and image-based content portfolio, we also achieved new breakthroughs in content variety during the third quarter, spanning short videos, long videos, and podcasts. Let me start with short videos.
spk06: We have constantly enhanced the value of our short video line-up, creating trend-setting and pioneering content that drives development industry-wide. This quarter, we launched an all-new short video series, The Pioneers, the debut episode, which recounts the rise, fall, and potent comeback of the almost 20-year-old tall industry giant LegoBall, garnered numerous shares and likes by users. Our sub-vertical medium, 36KR Auto, also continue to thrive, gaining momentum in content quantity and engagement with growth in the number of both likes and followers. Overall, short video is pivotal for broadening our customer reach and enhancing user engagement and stickiness. As of the end of the third quarter, we had over 8.5 million short video followers, among which more than 2.15 million were really big users.
spk02: In terms of long-term video, our first live broadcast program, Kanjia 2033, was the start of the second season. In this season, we will present the content in a more detailed way, including the character writing, the mystery of the times, the ten-year talk, the path theory, and the fast-forward and fast-forward, and so on. We will also broadcast the 30 minutes of the usual time, which will be extended to 40 minutes. In terms of guests, we not only invited the CEO of Tiangang News Agency and the founder of Di Guangtong, Li Xiaojia, the founder of Wei Lai Qizhe, Li Bin, the founder of Xiesheng Group, Liang Jianzhang, and the chairman of Qingdongfang Group, Chen Yanshun, etc., to communicate face-to-face, but also successfully invited the editor-in-chief of Lianxian Magazine, Moving on to long videos, our first long video show, Staying 2033, returned for its second season. This season, we extended each episode from 30 to 40 minutes and elaborated the narrative with greater detail across five segments.
spk06: including a deep dive into the GIST profile, a review of the historical backdrop, a thought-provoking analysis of the error shaping their business success, key takeaways and insights, and an engaging Q&A session. We hosted stimulating conversations with Chuck B. Xiaojian, the former chief executive of Hong Kong Exchange and founder of MicroConnect. William DeBean, founder of NEO, James Liang, founder of Trip.com Group, and Chen Yanshun, chairman of BOE. We also have the privilege to present to you Kevin Kelly, the founding executive editor of Wired Magazine, who is widely recognized as the father of the Silicon Valley spirit, for an inspiring session. This flagship initiative was live-streamed across various platforms, including WeChat channels, Youku, and the Beijing Radio and Television Station. It not only cemented our standing as an innovator in long video production, but also showcased 36K as Oba's brand influence across the industry.
spk02: In addition, the company continues to explore the innovation of audio content. Our first-class live broadcast program, the first-class live broadcast program, the first-class live broadcast program, the first-class live broadcast program, In addition, we continue to broaden the horizons of our innovative audio content lineup.
spk06: Our first live podcast, Get Off Work, Have Fun, fully leveraged our high-quality content assets and delighted our listeners with a more diverse and personalized audio experience. Additionally, several of our audio content programs were featured on Himalaya's tech channel, including news flash briefing, business intelligence hub, and services care breaking news. By driving user growth through an enriched content experience, we made solid progress in profiting our comprehensive closed-loop content ecosystem.
spk02: AI technology's rapid development has brought us a historic development opportunity. The vibrant innovation in AI technology is creating intriguing growth opportunities for 36KR. As we diligently integrate AIGC technologies throughout our ecosystem,
spk06: We further enhanced our content production efficiency through AI applications of image generation, video creation, script editing, and data collection. Additionally, we launched the 36KR Media Lab in Silicon Valley, our first unmanned initiative, to further explore the innovative application and development of large language models in the financial industry.
spk02: At the same time, we also collaborated with Baidu, Shangtang, Kedah Xunfei, and other leading top companies. For the more, we joined hands with top tier industry players including Baidu,
spk06: and iFlightTech to deepen AIGC applications, including AI-powered deep dives into financial reports and the dynamics of the primary market. Harnessing AI-powered technical tools, we have delivered more comprehensive, more agile, higher-quality offerings to a broader spectrum of companies while optimizing our report's value for money. Similarly, we also implemented a comprehensive AI-driven transformation company-wide. Launching AI-driven upgrades for a wide array of services and products, such as the SearchSysKR Enterprise Platform and our Venture Capital Platform, further reducing operating costs and elevating efficiencies.
spk02: In addition, after building the first AI e-commerce shop on the whole network last quarter, we are once again exploring the potential of AI. Using AI technology, we successfully built the Xiaohongshu home operation strategy blog. In just a month, we have gained a lot of attention and likes.
spk06: I'd also like to specifically highlight our foray into AI empowerment during the quarter. Following our pioneering AI-powered e-commerce store earlier this year, this quarter we applied AI technology to create a virtual blogger for the Asia Games on Xiaohongzhu, which garnered significant visibility and engagement in just one month. Initiatives like this stand as a resounding testament to our leadership and consistent excellency in AI innovation and application.
spk02: With a rich ecosystem of content and AI technology, our content and product collection is increasingly rich, and the customer community is gradually diversifying. Stable and high-quality customer resources reflect the company's strong market influence, while also maintaining the continuous stability of the company's performance and establishing good foundations. Next, I will share with you the commercialization progress of various types of business, as well as how AI promotes business innovation and long-term application.
spk06: Thanks to our enriched content ecosystem and AI empowerment, our content and product matrix remain robust with an ever-broadening array of offerings. Furthermore, we continue to diversify our customer dynamics. Our stable, high-quality customer base not only reflected the company's substantial market influence, but also laid the groundwork for assistance and strategy in key performance metrics. Next, I'd like to share a more detailed process on each of the segments highlighting the role of AI application in driving business innovation across various scenarios.
spk02: First of all, advertising revenue increased by 11%. We fully played out the advantages in terms of content and channels, and achieved a high rate of user response and sales growth. Under our continuous service innovation, this quarter's customer base price increased by 20%. Through the development of the focus, 3.6 has already accumulated experience in advertising services in many industries, including TMT, consumption, cars, real estate, advanced manufacturing, and new energy. It can meet the marketing needs of different industry advertisers. For example, we have brought a comprehensive and marketing plan for the Hire All-Compatible Space Publishing Conference. From the early pre-release posters and IG videos to the customization of live broadcasts and live broadcasts of articles and topics, we hope that the exposure will exceed 7.94 million. At the same time, we have also achieved a diversified propaganda content for Baidu Intellectuals. First, let's look at advertising, where our revenue increased by 11% year-over-year, fully leveraging our strength in content and distribution channels. Thank you.
spk06: engage target audiences, and achieve the high marketing conversion rate. Furthermore, our continuous service innovation job has improved up by 20% year-over-year during the quarter. Through years of development, 36CR has accrued extensive advertising service experience, standing multiple industries, including T&T, consumer goods, automotive, real estate, advanced manufacturing, and new energy. As such, we are well positioned to accommodate the distinct market preference of advertisers across a broad spectrum of industries. For example, we provided a full-service integrity marketing campaign for the launch event of Hire's Wet-Dry Space Smart Robot Vacuum Cleaner from pre-event teaser posters and ID views to customized albums and live broadcasts during the event. Our choreography of only channel content dissemination and created topics resulting in total online exposure of over 7.94 million views. We also crafted a variety of marketing materials of Baidu, AI Cloud, utilizing infographics and videos of on-site tours to vividly present its capabilities. We broadcasted its content across our new media metrics to efficiently reach the target audience, receiving widespread acclaim given our Premium content, profound insights into users' faith and preferences, and a high conversion rate of commercialized content. We expect it to attract an increasing number of advertisers for content promotion going forward, as well as achieve sustained revenue growth in advertising.
spk02: In terms of the short video, with our content constantly breaking through on Bilibili, Xiaohuangshu, and other platforms, we have attracted more advertisers of different categories, including smart technology, consumer life, cultural entertainment, and many other fields. We continue to release top-notch content, including the creation of small red books, AI, Asian Games bloggers, and video. From the point of view of entertainment, we have reached 1.62 million in the number of broadcasts and posted the top 30 on the Weibo hot search list. As mentioned earlier, we continue to explode in the brand power of the 30-person car platform in the media. We have reached a new cooperation with many well-known car companies such as BMW and Benz. At the same time, we have gone to car shows such as Munich, Guangzhou, and Chengdu, and brought one-hand car show information to users in the form of pictures, short videos, live broadcasts, and so on.
spk06: In terms of short video advertising, as our content continues to gain traction on platforms like Bilibili and Xiaohongshu, we have attracted a more diverse range of advertisers, spanning intelligent technology, consumer lifestyle, culture and entertainment, and other sectors. This quarter, we built on our track record of producing prominent content by crafting a compelling video in collaboration with Alibaba Cloud, about our AI-Driving Asia Games blogger on Xiaohongshu. Infused with unique perspectives, the video garnered 1.62 million views on Bilibili and ranked 30th on Weibo's trending topics list. Also, as I mentioned previously, our sub-vertical medium, Stratasys KR Auto, continued to amplify brand influence, fostering new partnerships with renowned auto manufacturers, including BMW and Mercedes-Benz. We attended the 2023 IAA mobility event in Paris and also showed spending major cities, including Guangzhou and Chengdu, delighting users with first-hand insights into the latest auto market dynamics through the wide variety of content displays formats, including images, taxis, short videos, live streaming, and more, while further expanding our reach and partnerships in the auto market.
spk02: At the same time, at the value of IAA, Meanwhile, empowered by AI technology, we set trends in digital human marketing by premiering live streaming sales sessions featuring digital humans
spk06: in our Taobao store, an innovative initiative that has attracted the interest of many clients in addition cooperation. In addition, we continue to expand and deepen AI applications across diverse scenarios, capitalizing on our underlying technology's advantages in real-time interaction, visual effects, creative graphics, and other features to offer our users diversified AI marketing solutions, propelling the company's efficiency and sustainable growth.
spk02: In this quarter, we continue to provide high-quality services and cooperate with more companies and government clients. We held a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 306-carat Sustainable Value Conference, a grand opening of the 30 fully embodies the 36K as a new economic service platform to connect the attributes and values of all parties. Last week, our annual enterprise conference Y4 conference was held in Beijing. The theme of this conference is commercialization and AI experience technology. We invited Li Kaifu, Zhang Yaqin, Gu Qingyou, and other 300 experts, entrepreneurs, and investors from the business and economic fields to attend the conference and give speeches. And we will also name the conference as the net of business. The conference will cover the entire business field and attract many large-scale traditional enterprises to the venue. With respect to enterprise value-added services, in the third quarter, we remain committed to providing high-quality services, leading to collaborations with additional corporate clients and government institutions.
spk06: We hosted several industry-specific summits during the quarter, including 36KR Carbon Summit, Sustainable Value for Green Horizons, and the VETA Digital Innovation Tour, deepening our engagement in these sub-verticals. Notably, at our 36KR Carbon Summit, Sustainable Value for Green Horizons, experts, scholars, and stakeholders representing professional institutions, top-tier platforms, and leading consumer group companies from China and around the globe gathered together to dive into the latest trends shaping low-carbon consumption, policy dynamics, and pioneering practices. The summit achieved total online exposure exceeding 80 million views, underscoring services care's pivotal role in fostering valuable connections among stakeholders in the new economic sector. Another recent highlight was our annual flagship WED conference, which successfully concluded last week in Beijing. This year's theme centered on commercialization and cutting-edge AI technologies. Whilst WISE was previously focused solely on new economic participants, this year we broadened the conference range to cover the entire business sector and updated its title accordingly to WISE 2023 Kings of Business. We hosted over 300 distinguished commercials and economic experts, scholars, business elites, and investors, including Kai-Fu Di, Ya Qin Zhang, and Qin You Guan, sparking ideas through thought-provoking discussions. Quite a few of China's traditional industry icons also joined us at WISE 2023, including Xi Bei, Joy Wan, and Sun Zeyi, enriching the event's diversity and offering fresh industry perspectives. WISE 2023 amassed over 1.03 billion views, further showcasing 36K's brand influence.
spk02: Your offline events, our consulting services and other enterprise value-added services continue to gain momentum during the quarter.
spk06: 36 KR Research Institutes fully depend on industry insights, elevating our reputation through the publication of industry research reports. On the commercialization front, we forged collaborative consulting partnerships with government institutions in prominent cities such as Guangzhou, Chongqing, Hangzhou, and Huizhou, among others, as well as with industry giants, including Lenovo, Kerr Holdings Inc., Unicron Tech, and Pacific Insurance, among others.
spk02: For the more, we have made consistent meaningful progress in our regional business expansion
spk06: We co-hosted an AI industry development summit titled AI West Lake with the government of Sihu District, Hangzhou, at the EPSPA Conference 2023 to further explore innovative AI applications. Additionally, we launched a Connecting the Doors Along Investment Trails, a strategic initiative capitalizing on our extensive resources across large-scale traditional and innovative companies. This program aimed to strengthen regional industry chains address relevant shortfalls, and expedite the integration of industry ecosystems. Our production of high-quality content for this program has significantly increased user attention and engagement.
spk02: It is worth mentioning that the rise of the RMB fund and the development of the government-led food and beverage fund have also provided more options for new energy companies. With the advantage of the platform and the high-quality resource collection capability, Samsung is working with the parent fund to continue to enter the regional market. It's also worth mentioning that with the rise of RMB funds and the evolution of guided funds, stakeholders in the new economic sector enjoy a plethora of investment options.
spk06: maximizing the benefits of our robust brand advantages and adaptive resource alignment capabilities. We forged partnerships with funds extending our region to regional markets to identify optimal financing channels and approaches for a broader spectrum of enterprises. In addition, I'd like to highlight that our fund management subsidiary was recently successfully registered as a fund manager. This strategic move unleashed fresh opportunities for us to facilitate deeper connections among industry stakeholders and investment institutions while exploring involving possibilities for industry-wide cooperation, steering the company towards a new phase of growth.
spk02: In terms of e-sports services, this season, with the diversification of course content and efficient strategy, e-sports services have reached 1,151 million yuan, which is 62% of the total profit. Regarding subscription services,
spk06: The revenue from subscription services increased by 62% year-over-year to RMB 11.51 million during the quarter, bolstering our diversified course offerings and efficiencies customer acquisition strategies. In addition to upgrades across our traditional training courses, such as funding a salvation cap, we forge ahead with the development and expansion of high-quality degree-based programs. For example, we made great progress on the postdoctoral research program we rolled out in collaboration with Cable College of the University of Oxford, further driving our revenue growth. In the meanwhile, we continue to add new courses to our portfolio and with a can-do spirit. Partnered with top universities worldwide to cultivate a high value-added training ecosystem, providing China-based senior executives with avenues to expand their careers globally.
spk02: At the same time, with the widespread application and product intelligent innovation of AI technology, the demand for the market is growing day by day. In order to embrace this trend, we are actively cooperating with more AI-related companies to develop AI-related courses, and jointly build AI-based training.
spk06: more with the widespread application of ai and unceasing innovation in product intelligence market demand for ai expert is growing increasingly urgent we are actively embracing the business opportunities arising from this trend in collaboration with more ai focused partners to expand and enrich our offerings and training system with AI-related courses. Our strategic partnerships cover AI-plus training and innovative talent development, as well as industry-specific large language model solutions. Together with our partners, we are setting the new benchmark for talent development in artificial intelligence, propelling the digital transformation of a wide range of enterprises.
spk02: In the case of an uncertain environment in Hong'an, users' demand for improving their personal capabilities is constantly growing. There has been a sustained increase in user demand for self-enrichment
spk06: Consequently, the training sector outperformed market trends in a contraceptive fashion, aligned with the wisdom of the old saying, to do a good job, one must first sharpen his tools. Our users' self-improvement has translated into overall enhancement of their performance and efficiency in corporate workplaces. We are confident that as a company, we invest in the training field. We will further enrich our course offerings, constantly enhance our training system, and continuously expand our consumer base. We expect a significant growth potential for our subscription services as we move forward.
spk02: In the third quarter of 2023, we will maintain a good growth trend. The total revenue increased by 2.5% to 97 million yuan. Advertising business increased by 11%. The subscription service is growing rapidly, with the same growth rate of 12%. The profit margin continues to remain at 56%, fully reflecting our business's resilience and vitality in the face of the challenge of the macroeconomic economy. At the same time, we are building comprehensive professional content evidence in the form of long-term video, audio, broadcast, live broadcast, and so on. The total number of fans has surpassed 32 million, achieving a continuous growth of 10 seasons. In the future, Sinovac will use the same high-quality content, strong platform influence, and subtle innovation spirit In short, we maintain increasing growth momentum in the third quarter of 2023. Our total revenue increased by 2.5% year-over-year to RMB 97 million, with revenue from our advertising business up 11% year-over-year, outpacing market trends.
spk06: Not only revenue from our subscription services surged by 62% year-over-year, and our growth margin remained high at 56%, a compelling testament to the resilience and the vibrancy of our business as we adapted and navigated the medical challenges. In the meantime, we redoubled our efforts across content formats, including images, texts, short and long videos, audio, podcasts, and live streaming, among others, fostering a sophisticated full-spectrum content matrix. The number of our followers is across the 32 billion, extending its growth stake for a 10th straight quarter. Looking ahead, building on our peerless content, formidable brand influence, and keen sense of innovation, we will actively forge new partnerships with global industry leaders while resiliently exploring innovative AI applications, propelling the company's enduring accuracy and sustainable growth.
spk02: Exactly. I will now turn the call over to our CFO, Ms. Lin Wei, who will discuss our key financial results. Please go ahead, Lin.
spk03: Thank you, Pao. Now I'd like to walk you through more details of our third quarter 2023 financial results. Please note all amount numbers are in RMB unless otherwise stated. Total revenues increased by 2.5% year-over-year to $97 million in the third quarter of 2023, up from $94.6 million in the same period of last year. Online advertising services revenues increased by 11% to $71.2 million in the third quarter of 2023, compared to $63.9 million in the same period of last year. The increase was primarily attributable to more innovative marketing solutions we provided to our customers. Enterprise value-added services revenues or 14.2 million in the third quarter of 2023, compared to 23.6 million in the same period of last year. The decrease was mainly due to the negative impact of macroeconomic uncertainties. Also, our offline events are not scheduled evenly throughout the year, and it turned out there were relatively fewer events during the third quarter. Subscription services revenues increased by 62% to $11.5 million in the third quarter of 2023, compared to $7.1 million in the same period of last year. The increase was primarily attributable to our continuous efforts to offer high-quality subscription products and training programs to our subscribers. For example, in the third quarter, we rolled out the postdoctoral research program that we collaborated with the University of Oxford. which was well received by our high-end subscribers and helped boost our subscription revenues growth during the quarter. Cost of revenues was 42.3 million in the third quarter of 2023 compared to 35.5 million in the same period of last year. The increase was primarily due to higher fulfillment costs and compound costs. Gross profit was 54.6 million in the third quarter of 2023 compared to 59.1 million in the same period of last year. Cross-profit margin was 56% in the third quarter of 2023 compared to 62% in the same period of last year. Operating expenses were $77.5 million in the third quarter of 2023 compared to $62.1 million in the same period of last year. Sales and marketing expenses were $32.4 million in the third quarter of 2023, an increase of 1% from $32.2 million in the same period of last year. The slight increase was largely due to the increase in payroll related expenses, partially offset by the decrease in marketing related expenses. G&A expenses was 36.9 million in the third quarter of 2023, a 123% increase compared to 16.6 million in the same period of last year. The fluctuation was primarily attributable to certain one-off expenses including severance payments as we optimized our organization and office lease termination fees incurred in the quarter, as well as an increase in allowance for credit losses. Research and development expenses were $8.3 million in the third quarter of 2023, a decrease of 38% from $13.4 million in the same period of last year. as we continued to proactively embrace AI technology and streamlined our research and development teams, resulting in a decrease in payroll-related expenses. Share-based compensation expenses recognized in cost of revenues, sales and marketing expenses, research and development expenses, as well as G&A expenses, totaled $1.4 million in the third quarter of 2023, compared to $2.6 million in the same period of last year. Other income was $4 million in the third quarter of 2023 compared to $5.7 million in the same period of last year. Net loss was $18.9 million in the third quarter of 2023 compared to net income of $2.5 million in the same period of last year. Non-GAAP adjusted net loss was $17.5 million in the third quarter of 2023 compared to non-GAAP adjusted net income of $5.1 million in the same period of last year. Net loss attributable to 36 KRs ordinary shareholders was $18.9 million in the third quarter of 2023 compared to net income attributable to 36 KRs ordinary shareholders of $1.7 million in the same period of last year. Basic and diluted net loss per ADS were both $0.45 in the third quarter of 2023 compared to basic and diluted net income per ADS of $0.04 in the same period of last year. As of September 30, 2023, the company had cash, cash equivalents, restricted cash, and short-term investments of $116 million, compared to $136.5 million as of June 30, 2023. The increase was mainly attributable to small-sized, long-term investments in certain new economies entities we made in the third quarter of 2023, as well as net cash outflow from operating activities. If we exclude the previously mentioned one-off payments relating to the optimization of our organization and moving our headquarters office, which altogether amounted to over $25 million during the third quarter, our cash position actually would have increased quarter over quarter. This concludes all of our prepared remarks today. We will now open the call to questions. Operator, please go ahead.
spk01: Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad. To withdraw your question from the queue, please press star then 2. And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Today's first question comes from Shan Zhao with CICC. Please go ahead.
spk09: Congratulations to the solid performers in the third quarter. How does the management view the fourth quarter and next year's advertising revenue trend? Thank you.
spk02: Thank you very much. I remember our advertising business has actually shown a relatively good growth trend. You can see that it shows 11% growth compared to the previous year. With the gradual stabilization of the market, we see that the demand for advertising is higher than in the previous few months. At the same time, we are trying to coordinate the advertising strategy to win the trust and support of customers, and achieve the stable development of business. Our customer group includes Internet giants, world's top 500 companies, and large traditional enterprises. The investment of these enterprises in advertising has shown a relatively stable growth trend, such as Xipei, Jiomu Wang, Shengdele, Boston, to increase our customer base by 20%. At the same time, we also provide more flexible and diverse services for a variety of new and emerging companies. Through images, long and short videos, and other diversified forms, we meet the needs of various online customers. We have an optimistic attitude towards the fourth-generation online business. Of course, we will continue to improve our online business. We will continue to enhance the influence of content, strengthen the deep cooperation with the owner of the account, and explore new marketing models such as AI marketing to create more opportunities for online business growth.
spk06: The third quarter brought sustained and robust growth momentum in our advertising business, with year-over-year revenue growth of 11%. As the market gradually stabilized, we noted an encouraging rebound in demand for advertising compared with previous months. Our branding and performance-based one-stop advertising solutions have earned substantial trust and support from clients, sparkling steady growth. Our advertising consumer base includes internet giants and Fortune Global 500 companies, as well as China's traditional industrial icons, such as Seabay, Joy One, Sun Daily, and Bosenden. Steady growth of advertisement placement by these companies propelled a year-over-year increase in our pool of 20%. Meanwhile, we also offer the flexible and versatile services to emerging industry players. catering to their diverse advertising and marketing needs with graphics, text, and long short videos, among other formats. For the fourth quarter, we maintain a cautiously optimistic outlook for our advertising business. To drive continued growth in our advertising business, we will further enhance our content influence, strengthen our in-depth cooperation with advertisers, and actively explore AI marketing and other new marketing channels to create more growth opportunities for advertising. Thank you. Next question, please.
spk01: Thank you. And as a reminder, ladies and gentlemen, it is star than one to ask a question. Our next question comes from Lingyi Zhao with SWS Research. Please go ahead.
spk07: Hello, Mr. Da. Hello, Mr. Wei. Thank you very much for accepting my question. I have two questions. The first question is about our long-term video business. We saw that the long-term video and short-term video business have been growing relatively well. So for this part, what are the plans for our further development and growth potential? And the second question is about finance. We saw that Q3's profit margin is still at a relatively high level. So, what progress has the company made in the cost reduction effect? I'll translate it. Congrats with the good results, and I have two questions. The first one was both long and short video segments recorded robust growth on a sustained basis. What plan do you have in place to unlock further growth potential? And my second question is, the company's growth margin remained fairly high in Q3, What has the company achieved in cost reduction and efficiency enhancement? Thank you. Thank you.
spk02: Thank you, Lin Yi. I will answer the first question first, and then Lin Ji will answer the second question. We have always paid great attention to the innovation and diversification of short video content. Currently, our short video content covers many fields such as technological innovation, commercial insight, and lifestyle, as well as broadcasting on short video media platforms such as Bilibili, Douyin, and Kuaishou. At the same time, our vertical, purple, and black 36 cars Since the beginning of the last half of the year, the content volume, number of likes and number of fans have made a lot of progress. Thanks to the new cooperation of many well-known car companies within the BMW branch, up to the end of this season, the number of short videos on the whole network has exceeded 8.5 million and increased by 41%. Among them, the number of fans has exceeded 21.5 million. With the rapid development of social media platforms, short videos have become an important way for users to interact and socialize, and they have also received extensive support from advertisers. At the same time, Short video ads compared to other forms of ads have a higher price tag and further improve the overall income of the company. In terms of long video ads, as the host, I launched a program called See 2033 this year. I especially invited Wang Shi, Li Yanhong, Li Xiaoxia, Liang Jianzhang, and Kevin Kelly, who have profound future insight, to have a conversation. It has caused a good impression among the audience. The first season of the program has been broadcast successfully. The total number of viewers has exceeded 250 million. The second season of the program We have consistently prioritized content innovation and diversification for short videos.
spk06: Our line-up already covers diverse topics ranging from technology, innovation, and business insights to lifestyle posted across popular short video media platforms including Tidibidi, Douyin, and Kuaishou. Our sub-vertical medium, 36KR Auto, is also worth highlighting. Since its launch during the first half of 2023, 36KR Auto has made great progress in terms of content quantity and user engagement with a surging number of likes and followers. We have also initiated partnerships with top-tier automakers such as BMW and Mercedes-Benz. As of the end of this quarter, we had over 8.5 million short video followers, up 41% year-over-year, among which more than 2.15 million were Bilibili users. In the swiftly evolving landscape of social media platforms, Short videos have emerged as a crucial channel for user interaction and social engagement, earning widespread favor among advertisers. Short video ads also boosted a higher up-pull compared to other advertising formats, further propelling the company's overall advertising revenue. Regarding long videos, this year, I hosted a long video show for Say in 2033, The show featured enlightening conversations with visionaries including Wang Shi, Robin Li, Charles Li, Xiao Jia, James Liang, and Kevin Kelly, which deeply engaged a diverse audience. The first season has successfully concluded with a total online exposure of over 250 million views, and the second season is currently arising on Youku and Beijing radio and television stations. Looking ahead at 2024, we will continue to expand our footprint in long videos. We have three to four new programs in our long video pipeline, which are set to further enrich our content ecosystem.
spk03: Lin Yi, thank you for your question on gross margin under the financials. This is Lin. I will take your question. First of all, we continue to take rigorous cost control measures and optimize our cost structure. That's why we were able to maintain our gross margin at a relatively high level, which is 56% level in the third quarter. On top of gross margin, actually I want to highlight further that we are also taking initiatives to improve our operating margin as well. To cut our spending Actually, in the third quarter, we have taken several measures. For example, we moved our headquarter office to a relatively lower rental building in the third quarter. And secondly, we continue to improve AI technology, which enables us to streamline our R&D team, and which resulted in some cost savings in the payroll side as well. So, if you take a look at our operating expenses in Q3, although there were temporary some one-off impact in Q3 because we have to pay some severance compensation, as well as terminating the old lease contract, we need to pay some compensation. So that hit our third quarter, but that's temporary and that's only a one-off issue. And if you take a long-term view at these initiatives, those two measures altogether will give us a spending cut of at least 30 million RMB on an annual basis. So that's quite an improvement on our operating margin. And going forward, on one hand, we will continue to grow our revenues. And on the other hand, we will continue to embrace AI technology to more diversified business scenarios, so to cut our costs and further cut our spending. So overall, we will improve our growth margin as well as operating leverage. Thank you.
spk01: Thank you. And our next question comes from Pei Pei Hu with Industrial Securities. Please go ahead.
spk08: 好的,大老师好,魏总好,谢谢那个,这是我的问题。 然后咱们在前面也提到很多就是AI帮助我们来提升不管是内容还是我们运营的一些生产效率, 那我们同时其实也很关注增长的这个维度。 Thank you, management, for taking my question. As you already explained, how AI played a very important role in improving efficiency. But could you share more details about how eventually AI helped make money? So could you share your monetization attempts in this area? Thank you.
spk02: 好的,谢谢佩佩。 三成科在生存式AI领域,其实我觉得一直表现得比较敏感的。 上个季度我们转型应用AI技术开设淘宝店, And first of all, we used a number of people to deliver the live broadcasts. This season, we cooperated with Aliyun to use Aliyun's unified large-model technology to create a small red book. Also, we have received a lot of attention and likes. In the field of advertising, we are actively exploring and using AI technology to enhance the marketing effect and innovation strategy, including individualized advertising content production, upload, and AI decision-making based on data analysis. We will continue to provide more intelligent, efficient, and innovative marketing solutions to our customers through AI. At the same time, we cooperate with special companies such as Baidu, Shangtang, Kedah, and Xunfei to explore the deep application of AI technology. For example, AI tech analysis and AI market report. Let me explain briefly. For example, today, we have a large number of companies in the market that have not been served by good financial media or good financial analysts. We think that the main reason why we did not provide services in the past is the cost. Today, we are exploring how to use AI to provide services to these companies, they will greatly reduce our costs and greatly improve our efficiency, making it possible for customers who used to be impossible to serve to become possible. For example, our AI 1G market report, in fact, until today, we still have the vast majority of reports that are free 1G market reports. It is the core of the entire content system of 36G, and the core of the entire 36G trading model. But today, a large number of companies that are looking for 36G market reports, we actually do not have the manpower to cover them. So today we are exploring the AI model to provide them with standardized services. This is also the same as what Lodi just said. It has this demand, but in the past we did not have the ability to serve. But AI has given us this ability. In fact, we are also exploring this way. I think it will be launched soon. So in general, we have been discussing AI in the last and second quarter. In the past two quarters, we have been focusing more on discounting and increasing efficiency. In the next two quarters, we hope that the AI we are talking about, especially AI-based products, will become a product that will have its own customers and market, and can reach the company's goal of increasing sales. So thank you, Peipei.
spk06: 36Care has clearly demonstrated its vision and keen humor with respect to generative AI. Following last quarter's pioneering AI-powered live streaming sales sessions featuring digital humans in our Taobao store, during the third quarter, we collaborated with Alibaba Cloud and leveraged its large AI model, TongYi, to create our Asia games blogger on Xiaohongshu, garnering significant visibility and engagement. On the advertising front, We are actively exploring and applying AI technology to enhance marketing effectiveness and craft innovative strategies. This includes personnel advertising content generation and advertising placement, as well as intelligent decision-making based on data analytical. By consistently extending our footprint in AI marketing, we seek to provide our clients with marketing solutions that are smarter, more efficient, and more innovative. Additionally, we joined hands with top-tier industry players, including SenseTank and iFlyTech, to deepen AIGC applications in analyzing financial statements as well as reporting on the primary market. Delivering more comprehensive, more agile, higher-quality offerings to a broad spectrum of companies adds exceptional cost-to-benefit ratio. Thank you.
spk01: Thank you. And our next question comes from Ruki Lu with Sealand Securities.
spk00: Please go ahead.
spk04: Hello, everyone. I just want to ask about the company's subscription service business. It's growing faster. What exactly is the reason? And in the future, what is the new growth strategy for this business? And then I'll translate it.
spk05: What specific factors contributed to the rapid growth in the company's subscription services? Any new growth strategies in plan for this segment? Thank you.
spk02: Okay, thank you, Ruixi. The main reason for the increase in the number of registered services is because of the launch of our high-value learning satellite course. This quarter, we launched a new learning satellite course with NJU's Gibraltars College, which led to a rapid increase in our class price, breaking 6.8 million yuan. At the same time, we are also continuing to polish and create classes, We will continue to cooperate with other prestigious universities in the world, including the University of London, the University of Leeds, the University of London, the University of England, the University of England, the University of England, the University of England, the University of England, The rapid growth in our subscription services was primarily propelled
spk06: by the launch of our high-value degree-based programs. This quarter, we joined hands with the Cable College of the University of Oxford and co-launched a new degree-based program, vastly boosting our approval to over RMB 6 to 8,000. Meanwhile, we continue to enrich the high-quality training courses offered through our Venture Capital Class and the Funding Acceleration Cap. Our diverse and engaging course offerings brought top-tier learning experiences to users, drawing extensive queries. Looking ahead, we aim for additional partnership with top universities worldwide on more international MBA programs, such as University of Oxford, University of Leeds, Queen Marine University of London, Aglia Ruskin University in the UK, and INSEC Business School in France, providing China-based senior executives with avenues to expand their careers globally. Moreover, with the vibrant advancement of AI innovation, we noticed an increase in people's demand for learning and harnessing AI technology. To address this demand, we are actively working with leading AI companies based in China to jointly develop AI-focused training programs, enabling participants to have a better grasp of AI technology and practical skills. Thank you.
spk01: Thank you. As there are no further questions, I'd now like to turn the call back over to the company for closing remarks.
spk06: Thank you once again for joining us today. If you have further questions, please feel free to contact the 36KR Investor Relations through the contact information provided on our website.
spk01: Thank you. Thank you. This concludes this conference call. You may now disconnect your lines and have a wonderful day.
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